Rent vs. Buy Analysis
Comparing net worth over 30 years.
*Analysis assumes rental prices increase by 3% annually. Buying costs include closing costs (3%) and selling costs (6%).
The boomer mantra “Rent is throwing money away” is officially dead.
With home prices at all-time highs, 30-year mortgages hovering between 6.5–7.5%, and rents finally flattening in many cities, buying is no longer the slam-dunk it was for the last 70 years.
This isn’t about whose monthly payment is lower.
This is about who has more money in 2045.
That’s why the calculator above doesn’t just compare cash flow — it shows your actual net worth under both scenarios.
How to Read the Graph
- Green line = Buying → your home equity over time
- Blue line = Renting + investing every dollar you didn’t spend on the house
If the blue line finishes higher after 15–30 years, you will literally retire richer by renting.
The 3 Costs 99% of American Buyers Completely Ignore
- Opportunity Cost (the biggest one by far)
That $100k–$200k+ down payment you locked into a house could’ve been growing at 7–10% in the S&P 500. Every single year it sits in real estate instead of the market is real money gone forever. - Maintenance & CapEx
HVAC dies at year 12. Roof at year 20. Water heater every 8–12 years.
Real rule of thumb in 2025: budget 1.5–2% of home value per year now (inflation killed the old 1% rule).
$600k house = $750–$1,000/month you have to add on top of PITI that never comes back as equity. - Transaction Costs (the silent 8–10% wealth tax)
When you finally sell, you instantly lose 5–6% to agents + another 1–3% in closing costs, concessions, repairs, and staging.
On a $800k house that’s $60k–$80k gone in one afternoon. Just like rent — except rent never pretends to be an investment.
The Famous 5% Rule – Still Works Perfectly in 2025 USA
Take the purchase price of the house → multiply by 5% → divide by 12.
If you can rent the same (or very similar) house for less than that number → renting is the mathematically superior choice.
Examples (2025 numbers):
- $600,000 house → $30,000/year → $2,500/month breakeven rent
- $800,000 house → $40,000/year → $3,333/month breakeven rent
- $1,000,000 house → $50,000/year → $4,167/month breakeven rent
If you’re renting that same place for $2,800 instead of the $3,333 breakeven? You’re printing money. Keep renting and invest the difference.
Why 5%?
~1.0–1.3% property taxes (varies by state)
~1.5–2% maintenance/CapEx in today’s dollars
~3% opportunity cost of capital (roughly the long-term stock market premium over home appreciation)
Most Common Questions, Real Answers
“Isn’t rent just dead money?”
No. Rent is the maximum you’ll pay for housing.
Mortgage interest + property tax + maintenance + insurance is the maximum you’ll pay for housing.
Both have huge “dead” costs. The only question is which pile is smaller.
How long do I need to stay to break even in 2025?
7–10 years minimum in most U.S. markets right now.
Under 5 years? You are almost guaranteed to lose money after double closing costs (buy + sell).
What should I put for home price growth?
3–4% long-term. That’s it.
Do NOT plug in 8–12% just because the last 3 years were insane. That’s gambling, not planning.
What about the mortgage interest tax deduction?
For 90%+ of buyers in 2025, the standard deduction ($14,600 single / $29,200 married) is now so high that itemizing doesn’t even make sense anymore. The tax benefit is basically dead for most middle-class buyers.
Final Gut Check
If the calculator says you’ll have $1–$3 million more by renting and investing, but you still want to buy because you want roots, good schools, a dog, painting the walls black, whatever — that’s 100% valid.
Just be honest with yourself about what it costs.
If buying leaves you $1.8 million behind over 30 years, that’s $60,000 per year you’re happily paying for the privilege of owning.
Perfectly fine life choice.
Just don’t call it investing.
Run your real numbers. Zero emotion. Pure math.
Then decide like an adult.